Sega Sues BOI Over Gacha Mechanics in Memento Mori and Cryptract

Sega Corporation, renowned for the Sonic franchise, filed a patent infringement lawsuit against mobile game developer Bank of Innovation (BOI) on October 21, 2024.

According to Otaku Research Institute, the lawsuit targets two of BOI’s games: the now-discontinued Phantom Beast Contract Cryptract (2012-2019) and their current hit title Memento Mori.

This legal action comes at a crucial time for BOI, as Memento Mori has become their flagship product, accounting for over 90% of their net sales at its peak.

Memento Mori, launched in October 2022, has garnered significant attention for its unique watercolor art style and a distinctive soundtrack featuring character-specific theme songs. The game’s success led to expansions including PC and English versions, telling the story of powerful female characters fighting to free their land from darkness.

At the heart of the dispute are five Japanese patents owned by Sega (No. 5930111, 6402953, 6891987, 7297361, and 7411307). These patents cover common mobile gaming mechanics, particularly gacha-related features such as synthesis systems (where players combine items to create better ones) and ceiling systems (which guarantee rare items after multiple attempts).

Sega is seeking ¥1 billion (approximately $6.6 million) in damages and an injunction against Memento Mori and related content. This legal action followed unsuccessful negotiations between the two companies over patent licensing agreements.

Industry experts have offered varying perspectives on the situation. Dr. Serkan Toto, a Japan-based analyst, mentioned on X that if Sega wins, the financial impact on BOI could be “substantial”. He also notes this case, following Nintendo’s recent legal action against Palworld developer Pocket Pair, might indicate a growing trend of major Japanese gaming companies pursuing legal action against smaller studios with surprise hits.

Patent attorney Kiyoshi Kurihara, via Yahoo News Japan (thanks, Automaton), indicated that this lawsuit may not be an attempt by Sega to eliminate competition but rather a move to secure a favorable patent licensing agreement. Kurihara suggested that negotiations between BOI and Sega broke down, leading to the lawsuit, but he believes a settlement could happen relatively soon once both sides reach an agreement.

Additionally, intellectual property law experts told GamesRadar+ that filing the lawsuit in Japan could result in a quicker resolution compared to the U.S. They predict the case could take around 18 months to resolve in Japan, which is significantly faster than the typical five-year timeline for similar cases in the U.S.

Despite the ongoing legal challenge, BOI has confirmed they will continue supporting Memento Mori while defending against the lawsuit, claiming that their games do not infringe on Sega’s patents. However, the company acknowledges uncertainty regarding the potential financial impact of this legal dispute.